Report: Prepare for Apple Television Product
December 20, 2011 11:05 AM
Launch date remains unknown, but Apple is actively pursuing this new market
The persistent reoccurring rumor that Apple, Inc. (
) will be making television sets has surfaced again.
The Wall Street Journal
is offering up in
a new report
evidence of secret meetings inside of Apple planning the launch of the new television product. The important take home message is that while the launch date appears to be uncertain, Apple is hard-targeting the product (courtesy of deep negotiations with TV content providers and its work on developing advanced user interfaces).
I. Apple Moves Towards Television With New UI, Licensing Work
We first heard about the
possibility of the Apple LCD TV
in an informal discussion with a former Apple Canada executive turned financial analyst. He claimed to us that the project was already relatively advanced and would likely debut sometime in the 2011-2012 time frame.
While that schedule now looks unlikely,
since have indicated that Apple is still chipping away at development.
Currently Apple sells a set-top box that offers streaming media functionality, but lacks the ability to install and use third party apps, a capability which
to Google Inc.'s (
) Android (Google TV) set-top boxes and integrated internet TVs. Apple TV is relatively inexpensive
retailing for a modest $99 USD
. While Apple announced 3 months after the device's launch that sales had hit 1 million units, it has since refused to comment on the device's sales. Rumor has it that the device is sharing
the sales difficulties
of Logitech International S.A.'s (
) Google TV set-top box.
The Wall Street Journal
report cites private commentary at Apple's 2010 "Top 100" meeting for senior executives as cause for skepticism. At that meeting an executive asked late Apple CEO Steve Jobs whether an Apple TV was in the works, and he responded that the profit margins were too low compared to mobile electronics and that people bought television sets too infrequently to make it worthwhile.
On the other hand, the report points to many signs since then that Apple may indeed be preparing to drop a shiny new television.
Steve Jobs challenged TV providers in a series of recent meetings, asking them how much of the world's video content they truly owned. While the meetings were reportedly in the "exploratory" phase, the parties involved discussed the possibility of Apple becoming a licensed reseller of television content, similar to cable networks. Such a subscription service could give Apple's next generation television product an edge over competitors like Google TV.
Google is reportedly
in similar talks with content providers
In his official licensed biography, Steve Jobs commented that
after years of prototypes of smart TVs
that connected to mobile devices like the iPad and iPhone that Apple had "finally cracked it". In their most recent meetings with television content providers, this topic was raised as well, with Apple discussing a scheme in which a user could begin watching their show on their TV and then moves to another room and continue to watch it on their iPad or iPhone.
Mr. Jobs also indicated that the iPhone or iPad would be able to be used as an advanced remote control for the upcoming television. Apple also appears to be working on other advanced interface technologies.
In the recent meetings with media companies, the Apple executives, including Senior Vice President Eddy Cue, have outlined new ways Apple's technology could recognize users across phones, tablets and TVs, people familiar with the talks said.
In at least one meeting, Apple described future television technology that would respond to users' voices and movements, one of the people said.
Such technologies have become mainstream in the video game console industry, thanks to pioneering innovators like Nintendo Comp., Ltd. (
) and Microsoft Corp. (
). But the technologies have thus far only been applied minimally to actually working as a user interface to the television (Microsoft does offer Kinect control in
certain select Xbox 360-accessible television programming
II. Why an Apple Television Makes Sense in the Long Run, Financially
One reason why an Apple television product seems likely is that it would provide a new resource stream for Apple, should it exhaust its existing sales streams.
While it's entirely possible that the iPhone and iPad could continue to thrive for decades to come, Apple's history suggests that while the company is adept -- perhaps the best -- at garnering an early sales and brand image lead, that its penchant for proprietary first-party products and core software has led to it being eventually marginalized.
Already Apple's iPhone has
fallen quite a bit behind Android
in smartphone sales. And while Android tablet sales have
grown at a slower rate than expected
, analysts generate are expecting them to pass iPad sales around 2015.
At this point Apple seems
from a profitability standpoint, if not from a unit sales standpoint. However, as other highly profitable smartphone makers like Canada's Research in Motion, Ltd. (
) have shown, it
only takes a couple years of dropping sales
to see your cash reserves and quarterly profits erode.
Apple's upcoming television product could be the first major new product to launch without Steve Jobs at the helm, since the late 1990s. [Image Source: AP]
Aside from business side of the equation, the launch of a "smart TV" product would be a landmark moment for Apple, as it would mark the company's first major new product introduced since the death of Steve Jobs. Of course, by the sound of it, the finished product would draw heavily on the early prototype work of Mr. Jobs and Co., so even in his grave he could still remain Apple television's MVP.
"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997
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